NEWS

Shop Direct secures funding from its parent company

Published on: 19th November 2019

The funding will come in the form of a £75m equity injection before the end of this month.

Shop Direct has confirmed it will receive a £150m cash injection from its parent company to face a cash crunch triggered by an unexpected surge in payment protection insurance (PPI) claims. The funding will come in the form of a £75m equity injection before the end of November, although the retail group insisted it has no short-term liquidity requirements.

The funds come from the company’s parent shareholder, Shop Direct Holdings Limited, which is controlled by David and Frederick Barclay.

Alternatives are still being reviewed for the second tranche of £75m, including both equity and debt financing options.

Shop Direct, which owns e-tailers Very.co.uk and Littlewoods.com, raised the alarm last month after seeing an unexpected surge in PPI compensation requests ahead of a deadline set by the Financial Conduct Authority.

A spokesperson from Shop Direct said: “Whilst the group has no immediate need for funding, £75m will shortly be invested in the business by way of equity injection from SDHL into Shop Direct, demonstrating the continuing support and commitment of our parent company.”

The company added that because it has no immediate need for funding, it is continuing to work with its financial advisers to evaluate alternative financing options for the £75m that will initially remain undrawn.

The cash injection comes amid speculation that the Barclay brothers are looking to sell parts of their business empire, in a move that could also affect Shop Direct.